March 29, 2019 / 4:12 AM / in 25 days

Breakingviews - Swine fever tests China's transparency credentials

FILE PHOTO: A pig is seen on a farm at a village in Changtu county, Liaoning province, China January 17, 2019. REUTERS/Ryan Woo/File Photo

HONG KONG (Reuters Breakingviews) - African swine fever is testing China’s transparency credentials. Grains trader Cargill is the latest company to cite outbreaks of the highly contagious hog disease as a drag on business. It’s likely to fuel fears that the world’s biggest pork producer may be under-reporting the issue. That taint adds to a fast-spreading problem for Beijing.

The Minneapolis-based agricultural commodities heavyweight said on Thursday that African swine fever, which has forced China to cull huge numbers of pigs, had pulled on demand for soybean meal. Earlier this week COFCO Meat, a subsidiary of China’s state-owned food group, pointed to the damage done to the domestic pork industry.

Officially, authorities in China have confirmed more than 100 outbreaks of the porcine disease, but many in the industry believe the reality is worse. Officials in some places seem reluctant to acknowledge the disease, perhaps in part because it would lead to pig slaughter and compensation of 1,200 yuan (some $180) per head, Reuters reported last week. Experts also note that reported patterns don’t conform to what might be expected of a typical disease outbreak.

The nagging suspicions make it hard to gauge the exact impact on producers and the wider economy. Officials in Shandong province, for instance, said that stocks of breeding pigs fell more than 40 percent in the seven months to February. The U.S. Department of Agriculture thinks that China’s total swine inventory might fall by around 13 percent this year. Analysts at Rabobank think the country is set to double its pork imports this year as a result.

There could even be an inflationary impact, given China’s love of pork. Analysts at Nomura estimate the meat’s price might peak at about 33 yuan per kilogram in January 2020 in the new hog cycle, compared to 22 yuan per kilogram at present.

But there’s a wider worry here. Beijing has made notable progress on transparency, such as on reporting human epidemics. Going backwards over swine fever is damaging in more ways than one.

Breakingviews

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